TiVo is a digital video recorder that allows viewers to watch what they want, when they want to watch it, and it allows pause and instant replay functions of live TV by storing information on a hard drive. It gives they user or users to ability to create their own personal television schedule by using the regular television programs. TiVo’s features include the ability to fast-forward, ultimately skip, through commercials and also input their own viewing preferences. TiVo also has popular features such as the “season pass” which allows users to specify their favorite shows, so that all episodes were recorded automatically.
One of the most popular strength of TiVo was the “thumbs up” and “thumbs down” buttons that allowed viewers to indicate how much they liked or disliked what they were watching. A big problem TiVo faced was getting people to “adopt” their product. With many features and functions, it was not as easy to explain TiVo as it was to experience, making it difficult to convince prospective customers. Due to the high 30-hour recording capacity of TiVo, it was more expensive than most televisions sets and over double the price of most satellite dishes.
How could historical TV viewer habits change so dramatically with the introduction of one new product? TiVo was in a new category with no real reference points, which discouraged and delayed consumers making their purchase decision. With the ability to give clients the opportunity to skip advertisements, TiVo faced a significant threat to the advertisement industry, which is a huge aspect of the whole TV industry as it is very dependent on advertising revenues. Television Networks wanted TiVo to complement their business instead of competing against it. They want to use TiVO to improve advertising revenues.
TiVo also had the ability of motorizing the viewer rates of their programs so they could improve their strategy to increase markets share and gain competitive advantage. Advertisers wanted TiVo to conduct more personalized and targeted advertising. By monitoring consumer preferences, advertisers could know what types of ads are more effective and what types are not. Cable and Satellite Companies want TiVo to be a complement to their services. An increase in market share would be a result of synergies that could occur when combining the variety of channels they have with the flexibility of TiVo.
TiVo did face some competition. Replay Networks, a more expensive product, posed a threat due to similar characterstics of its product and also to the large commission it pays to the salespeople. Ultimate TV, which was from Microsoft, posed a greater threat mainly because it combines several products like Internet and Email into the same product. Microsoft has the adcantage of introducing its digital video recording device through one million consumers who already subscribed to its WebTV subsidiary.
It also could claim that it was more technologically advanced that TiVo. However, it was coming into the DVR business at a later time and because it claimed to be better than TiVo, it was implied that it was going to be introduced at a higher price. TiVo’s action plan had a few options: possible merger with DirecTV, a price reduction from $999 for the 30-hour set to $399 for a 14-hour set, or to use different media to pass on different messages to consumers through different sets of TV commercials.
Merging with DirecTV was a good option because of DirecTV’s large client base which TiVo could use to leverage its product to a large number of customers. With the program and channel variety of DirecTV and the flexibility of TiVo, customers would be given a great combination. Lowering the price as well as the storage capability would be another good idea. It would allow for more inventory to be used for promotional purposes. At the original $999 price for a new product without any reference point for advertising would repel potential customers.
By using remaining 14-hour units as promotion items, TiVo would give potential customers the opportunity to experience TiVo rather than having it be explained, which was an initial problem for the product. Using different media to advertise different aspects of TiVo causes an issue of removing reliability in the message that TiVo would be trying to pass on to consumers. Not all consumers would get the experience TiVo was promoting in all the different media. This kind of advertising could lead to consumers not getting the whole picture because they only see fragments in the different media.
TiVo need to market more towards the general TV audience, not just towards early adopters. By not advertising directly to early adopters, TiVo lessens to possibly of less effective advertisement. TiVo may be seen by one consumer as a superior VCR, while others focus exclusively on the season pass and live TV features. If TiVo wanted to be successful in marketing to a general audience, then their plan to let to lower the price from $999 to $399 would be most effective. By adjusting the price, TiVo would be seen as a more sensible purchase to the public.
TiVo should also increase their technical support by having in-home installation and basic function explainations, similar to what Dell does with computers. Similarly, TiVo should continue to sell their product in major electronic stores with a mock living room instore setup. A full setup TiVo entertainment system could help demonstrate to customers how it actually worked. TiVo should also implement referral marketing to be used as an effective way to connect with the target market. With 71% of electronic equipment being influenced by friends or relatives, this could be a hugely successful implementation.
TiVo should provide new customers in the target markets with direct mail offer containing coupons for their friends and family to receive a free TiVo 30-day trail. For every new customer brought in by a current customer, a free month of TiVo service should be provide to the original customer. Incentives like this work very well for Bank of America, as they offer $100 dollars to existing customers if they get other people to sign up for certain types of bank accounts. Above all else, TiVo needs to reduce the gap between their product, advertisers and networks by making TiVo more of a friend than an enemy.
The slogan “program your own network” is harmful to TiVo as it alienates networks and advertisers. Instead of posing a threat, TiVo needs to work with networks so that it can provide increased product sampling, expand primetime and provide viewer feedback. For advertisers, TiVo can provide more predictability of audience size and characteristics. With relevant advertising and quality programming, TiVo could help evolve television towards a more customer-focused product that significantly improves value proposition.